Verge (Trustee), in the matter of Underdown (deceased) (a bankrupt) v Fazio

The case of Verge (Trustee), in the matter of Underdown (deceased) (a bankrupt) v Fazio involves the trustees of a bankrupt estate seeking to recover a property transfer they consider void. The dispute centers around a property transfer from the deceased to Mr Fazio, which the trustees claim was made to defraud creditors and is therefore voidable under the Bankruptcy Act 1966 (Cth). The matter was heard in the Federal Circuit Court of Australia.

The primary legal issues in this case were whether the property transfer from the deceased to Mr Fazio was voidable under the Bankruptcy Act and whether the trustees were entitled to specific relief to recover the property or its value. The court needed to determine if the transfer was made at an undervalue and if Mr Fazio had knowledge of the proceedings against the deceased that might have led to a costs order against her.

The court concluded that the transfer was voidable under section 30(1) of the Bankruptcy Act, as it was not made for market value and Mr Fazio was aware of the proceedings against the deceased. The court found that the transfer was effectively concealed as it was not registered until after the debt had crystallized and an appeal had been dismissed. The trustees were granted the relief they sought, including the power to sell the property and obtain vacant possession. Costs were awarded to the trustees, with the mortgagee having the right to apply for further orders within ten days.

The final orders will be made in open court on a date to be advised, reflecting the court's decision and the trustees' entitlement to recover the property or its value from Mr Fazio.